Tyson Furniture has $100,000 in excess cash that it wants to invest in one or more cash
Question:
Tyson Furniture has $100,000 in excess cash that it wants to invest in one or more cash equivalents. The treasurer has researched two money market accounts and two certificates of deposit (CDs) offered by four major banks. The following is the information she gathered.
All of these accounts are FDIC insured for up to $250,000. Suggest how Tyson Furniture might allocate its $100,000 cash among these four opportunities. Discuss the trade-offs that management must consider.
Investment Institution Omega Bank Bank of Denver Delta Bank Commerce Bank Investment Type Money market account Money market account 90-day CD 90-day CD Minimum Investment $ 100 25 2,500 2,500 Interest Rate 0.10% 0.06 0.05 0.10 Penalty for Early Withdrawal? No No Yes Yes Financial Risk Very low Very low Very low Very low
Step by Step Answer:
The highest interest rates are offered by Omega Bank and Commerce Bank both are offering 010 The ...View the full answer
Financial And Managerial Accounting The Basis For Business Decisions
ISBN: 9781260247930
19th Edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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A money market hedge is a technique used to lock in the value of a foreign currency transaction in a company\'s domestic currency. Therefore, a money market hedge can help a domestic company reduce its exchange rate or currency risk when conducting business transactions with a foreign company.
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